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BRIDGING MARKET COOLS IN RUN UP TO REFERENDUM

By Kit Thompson

Data from Bridging Trends confirmed bridging growth has stabilised, with contributor lending falling to £91.11 million in the second quarter of 2016- an annual percentage decrease of 8% (£99.11 million), and a 27% decrease on Q1 2016 (£125.35 million). Bridging lending in the second quarter fell by £34.2 million amid Referendum uncertainty, according to the latest Bridging Trends data.

Data from Bridging Trends confirmed bridging growth has stabilised, with contributor lending falling to £91.11 million in the second quarter of 2016- an annual percentage decrease of 8% (£99.11 million), and a 27% decrease on Q1 2016 (£125.35 million).

Bridging Trends is a quarterly publication conducted by bridging lender MTF, and specialist finance brokers: Brightstar Financial, Enness Private Clients, Positive Lending, and SPF, to monitor the general trends in the bridging finance market.

Unregulated bridging loans continued to outperform regulated bridging loans, though the number of regulated loans hit the highest level since Bridging Trends launched, at 48.4% of all lending, a trend likely attributed to MCD.

For the fifth consecutive quarter, “mortgage delays” were the most popular reason for borrowers accessing a bridging loan at 30% of all lending, dropping significantly from 42% in Q1 2016 but consistent with the same quarter last year (33%).

Refurbishment was the second most popular reason for getting a bridging loan, contributing to 22% of all lending and bridging loans for business purposes increased to 20%.

Second legal charge lending decreased to 16% for the quarter from 17.5% in Q1 2016, possibly attributed to the regulatory changes resulting from MCD.

Average LTV levels fell from 52.8% in Q1 2016 to 47.4%, and average monthly interest rates hit 0.88%, a decrease of 0.01%, reflecting increased competition amongst lenders.

The average term of a bridging loan climbed by 1 month to 11, falling in line with the same quarter last year. Whilst the average completion time on a bridging loan application increased by 9 days.

Key data points from Bridging Trends in Q1 of 2016 are as follows:

– Total contributor lending decreased to £91.11m, from £125.35 in Q1 2016

– Average completion time increased to 46 days, from 37 days in Q1 2016

– Average LTV decreased 47.4%- the second lowest LTV recorded by Bridging Trends since Q2 2015

– Average monthly interest fell to 0.88%

– First charge bridging loans reached 84%, up from 82.5% on the previous quarter